AUSTIN (KXAN) — Real estate brokerage Redfin said it sees housing demand starting to cool across the country, helped by soaring mortgage rates — but not yet in Austin.
red fin said mortgage rates were rising at their fastest rate in history, which means that a typical monthly payment has increased by more than $500 since the start of this year.
The average rate for a 30-year fixed mortgage rose above 5% on Tuesday for the first time since 2011, except for two days in 2018.
The company said that right now many homebuyers are trying to lock in their rate before it gets higher.
That’s what Caitlin Floyd and her husband did for their new home in Kyle.
“The interest rate was 5%, and a few weeks ago it was 3.7, and we’re like‘gasp!’ So, we had to lock in at 90 days, because we’re like, we can’t risk the interest rate going up anymore, because…our house payment will continually go up. We won’t be able to afford it,” she said.
Redfin expects other buyers to back off as rates exceed their budget. He said there were signs that change was already underway.
“We’re starting to see some early warning signs of lower demand – less searches for homes to buy, less tourist activity and also a few more price drops than we’ve seen…at the moment same time last year,” said Daryl Fairweather, Redfin’s chief economist.
Fairweather expects price growth to slow in Austin in a few months. That means fewer homes costing hundreds of thousands of dollars above asking price, she said.
“I think we’re going to hear less and less of these anecdotes, and things are going to come back down to earth a bit,” she said.
But Fairweather warned it would still be high compared to last year.
“It can range from 22% growth to 10% growth, which is still a lot…for any market,” she said.
She said that’s because while mortgage rates will lower the price for some buyers, others will come.
“Austin is a bit of a special market because there are so many people coming from more expensive areas like San Francisco, Los Angeles, New York,” Fairweather explained.
Floyd’s current Austin home was only on the market three days before selling for $30,000 above the asking price.
“Crazy,” she said. “We got a few offers before the open house, and we ended up not doing the open house, because we liked the contract we got.”
But even with that extra money, they couldn’t afford to stay in Austin.
“I feel like it’s just like the new normal. People are moving to Bastrop, people are moving to Kyle, people are moving to Georgetown,” she said. it’s just sad…what’s going on in the market.”
Texas A&M University’s Texas Real Estate Research Center says, based on the data, the Austin metro area is expected to see an increase in housing inventory for the remainder of 2022.
He said that should help alleviate supply difficulties slightly, but we are still a long way from a balanced market, which they estimate at around six and a half months of housing inventory.
According to the latest report from the Austin Board of Realtors in February, we currently only have 0.4 months of inventory.